European traders and distributors are currently unsure about how the latest announcement from ArcelorMittal of a reduction of 3 million tonnes/year in output by its European flat product mills could impact prices.

Kallanish price indexes for coil have reached the lowest levels since Q3 2016 as demand struggles and mills are competing fiercely for volumes. This decline has materialised despite the fact that import offers have remained above the domestic prices for the most part during this year so far.

“In theory prices should jump from domestic mills by at least €20/tonne ($22.39/t) following ArcelorMittal’s announcement, but the market is still subdued and we keep hearing domestic mills in Europe selling at €450/t ex-works base HRC and €540/t ex-works base CRC,” a Spanish trader comments.

A source close to a domestic mill, on the other hand, is more positive, but stresses that domestic mills have to stop lowering prices every week as a first step.

Currently Turkey remains the most competitive source of imports, but its prices are pegged at €460/t cfr South Europe and above, slightly higher than domestic offers. Indian mills remain uncompetitive, while a Russian supplier is sending some competitive offers to Antwerp.

Another trader notes that if ArcelorMittal sticks to its reduction of output announcement, then prices should rise. He notes nevertheless that the move could well have been made mainly to put political pressure on the European Commission as the EU safeguard review approaches.